HP: Overhauling a Vast Corporate Sales Force... Imagine this scenario: You need a new digital camera. You're not sure which one to buy or even what features you need. So you visit your nearest electronics superstore to talk with a salesperson. You walk through the camera section but can't find anyone to help you. When you finally find a salesperson, he yawns and tells you that he's responsible for selling all the products in the store, so he doesn't really know all that much about cameras. Then he reads some information from the box of one of the models that you ask about, as if he is telling something that you can't figure out for yourself. He then suggests that you should talk to someone else. You finally find a camera-savvy salesperson. However, after answering a few questions, she disappears to handle some other task, handing you off to someone new. And the new salesperson seems to contradict what the first salesperson said, even quoting different prices on a couple of models you like. That imaginary situation may actually have happened to you. If so, then you can understand what many business buyers face when attempting to buy from a large corporate supplier. This was the case with business customers of technology giant HewlettPackard before Mark Hurd took over as HP's CEO a few years ago. Prior to Hurd assuming command, HP's revenues and profits had flattened, and its stock price had plummeted. To find out why, Hurd first talked directly with 400 corporate customers. Mostly what he heard were gripes about HP's corporate sales force. Customers complained that they had to deal with too many salespeople, and HP's confusing management layers made it hard to figure out whom to call. They had trouble tracking down HP sales representatives. And once found, the reps often came across as apathetic, leaving the customer to take the initiative. HP reps were responsible for a broad range of complex products, so they sometimes lacked the needed depth of knowledge on any subset of them. Customers grumbled that they received varying price quotes from different sales reps, and it often took weeks for reps to respond to seemingly simple requests. In all, HP's corporate customers were frustrated, not a happy circumstance for a company that gets more than 70 percent of its revenues from businesses. But customers weren't the only ones frustrated by HP's unwieldy and unresponsive sales force structure. HP was organized into three main product divisions: the Personal Systems Group (PSG), the Technology Solutions Group (TSG), and the Image and Printing Group (IPG). However, HP's corporate sales force was housed in a fourth division, the Customer Sales Group (CSG). All salespeople reported directly to the CSG and were responsible for selling products from all three product divisions. To make matters worse, the CSG was bloated and underperforming. According to one reporter, \"of the 17,000 people working in HP's corporate sales, only around 10,000 sold directly to customers. The rest were support staff or in management.\" HP division executives were frustrated by the CSG structure. They complained that they had little or no direct control over the salespeople who sold their products. And multiple layers of management slowed sales force decision making and customer responsiveness. Finally, salespeople themselves were frustrated by the structure. They weren't being given the time and support they needed to serve their customers well. Burdened with administrative tasks and bureaucratic red tape, they were spending less than one-third of their time with customers. And they had to work through multiple layers of bureaucracy to get price quotes and sample products for customers. \"The customer focus was lacking,\" says an HP sales vice president. \"Trying to navigate inside HP was difficult. It was unacceptable.\" As Hurd peeled back the layers, it became apparent that HP's organizational problems went deeper than the sales force. The entire company had become so centralized, with so many layers of management, that it was unresponsive and out of touch with customers. Hurd had come to HP with a reputation for cost-cutting and ruthless efficiency. Prior to his new position, he spent 25 years at NCR, where he ultimately headed the company. Although it was a considerably smaller company than HP, Hurd had it running like a well-oiled machine. Nothing bothered him more than the discoveries he made about HP's inefficient structure. Thus began what one observer called \"one of Hurd's biggest management challenges: overhauling HP's vast corporate sales force.\" For starters, Hurd eliminated the CSG division, instead assigning salespeople directly to the three product divisions. He also did away with three layers of management and cut hundreds of unproductive sales workers. This move gave divisional marketing and sales executives direct control over a leaner, more efficient sales process, resulting in speedier sales decisions and quicker market response. Hurd also took steps to reduce salesperson and customer frustrations. Eliminating the CSG meant that each salesperson was responsible for selling a smaller number of products and was able to develop expertise in a specific product area. Hurd urged sales managers to cut back on salesperson administrative requirements and improve sales support so that salespeople could spend more quality time with customers. As a result, salespeople now spend more than 40 percent of their time with customers, up from just 30 percent before. And HP salespeople are noticing big changes in the sales support they receive: Salesman Richard Ditucci began noticing some of the changes late last year. At the time, Ditucci was trying to sell computer servers to Staples. As part of the process, Staples had asked him to provide a sample server for the company to evaluate. In the past, such requests typically took two to three weeks to fulfill because of HP's bureaucracy. This time, Ditucci got the server he needed within three days. The quick turnaround helped him win the contract, valued at several million dollars. To ensure that important customers are carefully tended, HP assigned each salesperson three or fewer accounts. The top 2,000 accounts were assigned just one salesperson\"so they'll always know whom to contact.\" Customers are noticing differences in the attention that they get from HP salespeople: James Farris, a senior technology executive at Staples, says HP has freed up his salesman to drop by Staples at least twice a month instead of about once a month before. The extra face time enabled the HP salesman to create more valuable interactions, such as arranging a workshop recently for Staples to explain HP's technology to the retailer's executives. As a result, Farris says he is planning to send more business HP's way. Similarly, Keith Morrow, chief information officer of convenience store chain 7-Eleven, says his HP sales representative is now \"here all the time\" and has been more knowledgeable in pitching products tailored to his business. As a result, last October, 7-Eleven began deploying in its U.S. stores 10,000 HP pen padsa mobile device that helps 7-Eleven workers on the sales floor. A SALESMAN AT HEART: Once the new sales force started to take shape, Hurd began to focus on the role of the client in the sales process. The fact that HP refers to its business buyers as \"partners\" says a lot about its philosophy. \"We heavily rely on [our partners]. We look at them as an extension of the HP sales force,\" Hurd said. To strengthen the relationship between HP and its partners, HP has partners participating in account planning and strategy development, an activity that teams the partners with HP sales reps and its top executive team. Because Hurd wants the sales force to have strong relationships with its partners, he practices what he preaches. He spends up to 60 percent of the year on the road with various channel partners and their customers. Part of his time is funneled through HP's Executive Connections program, roundtable meetings that take place worldwide. But many of Hurd's interactions with HP partners take place outside that program as well. This demonstration of customer commitment at the highest level has created some fierce customer loyalty toward HP. \"I've probably met Mark Hurd more times in the last three or four years than all the CEOs of our other vendors combined,\" said Simon Palmer, president of California-based STA, one of HP's fastest growing solution provider partners. \"There's no other CEO of any company that size that's even close. He's such a down-toearth guy. He presents the HP story in very simple-to-understand terms.\" Mark Sarazin, executive vice president of AdvizeX Technologies, an HP partner for 25 years, sings similar praises. \"He spent two-and-a-half hours with our customers. He talked in terms they could relate with, about his own relationship with HP IT. He knocked the ball out of the park with our 25-plus CIOs who were in the room. One said it was the best event he'd been to in his career.\" In the four years since Hurd took over as CEO, HP's revenues, profits, and stock price have increased by 44 percent, 123 percent, and 50 percent, respectively. Still, with HP's markets as volatile as they've been, Hurd has taken HP into new equipment markets as well as gaining a substantial presence in service solutions. Each time the company enters a new market and faces new competitors, the HP sales force is at the center of the activity. In an effort to capture market share from Dell, Cisco, and Lexmark in the server market, HP opened a new sales operation in New Mexico called the SMB Exchange. It combines a call center, inside sales, and channel sales teams. Observers have noted that whereas HP's sales force was known for being more passive in the past, it is now much more aggressivelike Cisco's. Hurd knows that because of HP's enormous size, it walks a fine line. In fact, he refers to the company's size as a \"strange friend.\" On the one hand, it allows the company to offer a tremendous portfolio of products and services with support from a massive sales force. On the other hand, multiple organizational layers can make it more difficult to create solutions for partners and customers. Hurd is doing everything he can to make HP leaner and meaner so that it can operate with the nimbleness and energy of a much smaller company. The changes that have taken place at HP have made most everyone more satisfied. And happier salespeople are more productive, resulting in happier customers. That should mean a bright future for HP. Hurd knows that there's still much more work to be done. But with a continued focus on the sales force and the sales process, HP is creating a structure that creates better value for its business customers. Now, if your local electronics superstore could only do the same for you. . . . Questions for Discussions: 1. Which of the sales force structures described in the text best describes HP's structure? 2. What are the positive and negative aspects of HP's new sales force structure? 3. Describe some of the differences in the selling process that an HP sales rep might face in selling to a long-term established customer versus a prospective customer. 4. Given that Hurd has an effective sales force, does he really need to meet with HP partners as much as he does? 5. Is it possible for HP to function like a smaller company? Why or why not